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About this Show

First Business

News/Business. Angie Miles. (2012) New. (CC) (Stereo)

NETWORK
FOX

DURATION
00:30:00

RATING
G

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Channel 93 (639 MHz)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
704

PIXEL HEIGHT
480

TOPIC FREQUENCY

Us 6, U.s. 4, Apple 3, America 3, Washington 3, California 3, S&p 2, Matt 2, Longshoremen 2, Gerri Detweiler 2, Larry Levin 2, Tully 2, J.c. Penney 2, Toyota 2, Seattle 2, Michigan 2, L.a. 2, Boston 2, Andrew Keene 1, Obama 1,
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  FOX    First Business    News/Business. Angie Miles.  
    (2012) New. (CC) (Stereo)  

    December 28, 2012
    4:00 - 4:30am PST  

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investors are yanking money out of the market in droves. are they losing faith in stocks at
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the wrong time? in today's cover story, from the port to the picket lines. an east coast port strike threatens to rattle the economy. after years of cutting out credit card use, why shoppers are getting back into the swipe of things. plus, could a tumble off the fiscal cliff hurt the markets? one trader says don't fall for the hype. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's friday, december 28th. i'm angela miles. in today's first look: watch your neck. the market is a head-turner. yesterday the dow dropped more than 100 points on word out of washington a resolution to the fiscal cliff was unlikely. but president obama returned early from vacation and is said to have a new proposal to offer congress, sparking a rally that left the dow down just 19 points. reports are swirling apple is
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moving production of its mac mini computers to foxconn plants in the u.s. apple may also be working on a smart watch. and, the new york stock exchange landed the most ipo for 2012. larry levin of trading advantage joins us now. larry, it feels like we are already hanging off that cliff. > > it definitely feels that way. everybody is obviously watching for some kind of news out of washington. that is what has moved the market every day for the past couple of weeks. it will be no different today. so i absolutely agree with you. > should investors be concerned about the move in the volatility index yesterday? > > it was interesting to see that, and it is really something that at least active investors watch on a regular basis, so any time the vix moves, i think it is something to watch. > what do you anticipate for the friday trade? > > i certainly think that we will see more lower prices in the market. the s&ps last week went below 1400, this past
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week. we have seen that, and i think that really shows us that we're going to see more trade below 1400 in the s&ps, so that is really what i'd watch for. > what about the volume? will it be there today? > > i think as long as this fiscal cliff sits in front of us, that is going to be there. the volume will die down when this situation dies down. it won't die down right away, but once this dies down and we get this behind us, that is when you will see the volume die down, not until then. > what is the talk on the floor? do traders think there will be a deal? > > i think traders do think there will be a deal, but we are certainly running out of time, so every second that goes by it gets closer and makes people maybe a little bit more apprehensive. the people doing that are selling the market when they see that. > they certainly are. larry levin of trading advantage. good to have you on the show today. > > thank you. a threatened port strike from boston to houston could put a lot of cargo in limbo, about 40% of all imports into the u.s. it could happen as early as sunday. and in our cover story, that could leave spring merchandise sitting on the high seas instead of store shelves. nearly 15,000 longshoremen may
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go on strike sunday if negotiators with commercial cargo shippers cannot reach agreement on a new six-year contract. and there is some hope - both sides agree to resume talks before an extended december 29th deadline. but if talks fail, would the fiscal cliff and a port strike be a one-two punch to the economy? "if its a couple of days, i think ultimately it would be a blip on the radar, but if it goes two weeks, it becomes a much greater problem." a key sticking point involves a fee longshoremen receive for each container that arrives in port. the container royalty fee was invented to help offset the need for fewer workers during the transition from bulk cargo to containers in the 1950s and 60s. shippers want the fee limited. longshoremen disagree. "it can be $15,000 per person. $200 million a year added to the cost of goods. that's a
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very significant number." if there's no compromise, a strike could leave goods headed for ports from boston to houston at sea and retailers with a headache. "if you have a container ship delayed two weeks, do you divert it to the west coast? that's an expensive option." and presidential intervention - unlikely. "i don't think president obama will get involved. it would be 'a betrayal' of organized labor." speaking of large travelers across oceans, ship traffic off california will be redirected next year to protect endangered whales which migrate along the coast. five whales died from collisions with ships in 2010.
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now, with support from the shipping industry, the changes will affect shipping lanes between san francisco and l.a. the fiscal fight is frustrating everyone from wall street to main street to capitol hill. but perhaps not for too much longer. reports say president obama will meet with congressional leaders today, and he has a new proposal to offer. yesterday, the president returned to the white house early from his christmas break in hawaii. the senate also returned to session. house speaker john boehner says the house will be called to order sunday and warns lawmakers they may work through friday. ford is expanding in the great lakes state. the automaker will invest $773 million in additions to four of its michigan factories. ford says it'll create 2300 new jobs and may lead to a goal adding 12,000 new jobs across michigan by 2015. the star of the hit tv series "grey's anatomy" is attempting to buy a coffee chain. patrick
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dempsey, better known as mcdreamy on "grey's," is said to be bidding on tully's coffee shop, which filed for chapter 11 banruptcy back in october due to a cash flow issue. it goes up for auction next week. tully's started up in 1992 in seattle and has multiple stores in washington and california along with nearly licensed locations across the country. the actor says he's stepping up to buy the chain to save jobs in the seattle area. five infant deaths have caused major retailers to recall a popular infant recliner. 150,000 "nap nanny" recliners are being recalled. a report says the product poses a substantial risk of injury and death to infants. amazon, toys- r-us and babies-r-us are recalling the item. the manufacturer, baby matters, said the company is "standing by its product 100%." toyota will pay $1.1 billion to settle dozens of cases related to sudden acceleration. but it's not the end of the
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carmaker's troubles. the proposed billion-dollar deal is considered the larget ever paid by an auto maker. it covers toyota and lexus owners claiming the value of their cars was hurt by potential defects that could cause the car to suddenly go out of control at high speeds. it does not cover dozens of wrongful death lawsuits or personal injury cases. the l.a. times reports at least one of those cases goes to trial this spring. 2013 is being pegged as "the year of the truck." car review site edmunds.com is predicting that the improving housing market will help boost truck sales. it is also estimating that overall auto sales will hit 15 million, an increase of 4% from 2012. the head of the epa is resigning after 4 action-packed years. lisa jackson is expected to step down early next year. she is giving no reason for leaving the office, although there is some speculation. as the obama administrations chief
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environmental watchdog, jackson's tenure includes high- profile battles over global warming, the keystone xl pipeline and new rules on coal- fired plants. the man behind an infamous insider trading scandal is still making headlines after his arrest. raj rajaratnam will pay a penalty of $1.5 million to the sec. it's connected to his civil case that stemmed from allegations of insider trading. last year, rajaratnam was sentenced to 11 years in prision for securities fraud and conspiricy. he also paid a record fine of $92 million. steinway has a grand plan to stay in business. the iconic musical instruments company famous for its pianos recently noted it was considering its options, including selling its band instrument division. but, after making cost cuts, steinway's third quarter earnings started showing signs of improvement. meanwhile, talks with potential buyers didn't offer as much value as expected. steinway stock is
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roughly 10% off-key for the year. seaworld plans to make a splash in the market. the aquatic theme park started the filing process this week to go public. seaworld expects to raise $100 million with the ipo. no word yet on an ipo date. the company plans to trade under the ticker symbol "seas." still to come, layoffs are making corporate america richer, but is it good for the company stock? our traders go ethical, later on in traders unplugged. but first, why more consumers are becoming comfortable with their credit cards. that's next, after this "in the know" message.
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over the last few years, we've been using our credit cards less and less. however, this year, holiday shopping saw that reverse itself. with us to talk about that is gerri detweiler. she's director of consumer education at credit.com. gerri, welcome. > > thank you. > what happened? > > there is a lot of frugal fatigue out there. we have been so careful with our spending for the past few years i think some consumers said "i deserve to buy myself something, not just other people gifts this year." so what we are seeing is, before the holidays, fico did a survey where they found that a slightly increased number of people said they would take three months or more to pay off their credit card debt that they plan to run up before the holidays. of course, now we have to see exactly what the numbers were after the holidays. but, generally i think that consumers
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are a little bit more optimistic with their spending this year. > why did this happen? we have been trained not to use our credit cards as much, not to max them out. why did this reverse itself? why do people feel so confident? > > we have seen a couple of trends when it comes to credit cards: we do see a lot of consumers who are using their credit cards to max out rewards, because the rewards programs, frankly, are really good right now. issuers are trying to lure in big spenders, we have all kinds of points, miles, and bonuses if they use their credit cards. so that's certainly one of the factors. that is a good deal, of course, if you pay in full. then i think the other factor, i go back to the idea that a lot of people have been very, very careful over the past few years, they're starting to feel a little bit more optimistic - maybe they're back to work, maybe they are starting to see a small bonus at work - and so they're saying, "maybe it is time to enjoy myself a little bit. i have been so careful with my money." > perhaps they're not so concerned about the fiscal cliff as others are as well. i want to ask you, what can consumers do about it now after the holidays if they have run up their credit cards a bit more than they had in years past? what can they do about it immediately? > > there are a couple of simple steps. the first thing i recommend is, check your credit reports and your scores, because that is going to determine what kind of rates you can get if you try to negotiate or if you try to consolidate, for example to a lower interest rate or do a balance transfer. so check your credit report. annual-credit- report.com, is the federally- mandated free credit report website. get a free credit score at credit.com as well. then the second thing is, take a look at your statements. on your statements, there is a number there that can tell us exactly how much you need to pay each month to pay off that debt in exactly three years. so, if you
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can pay that each month, then put it on autopilot, stop using the credit card, you have a get-out-of-debt plan. if you look at that number and say, "it's too high, i can't do it," that means you need to call a credit counseling agency for help. > lastly gerri, better to pay one card off fully, or to pay many of them off a little bit at a time? > > people with the best credit scores use about 10, maybe 20, 25 percent of their available credit on each of their credit cards. so if your goal is to maximize your credit score, try to get your balances down on as many cards as possible. if your goal is to save money though, you want to tackle the highest interest rate debt first, because that gives you the most bang for your buck. > very good advice. gerri detweiler, thanks so much. credit.com > > thank you. a record number of holiday shoppers pulled out the plastic to buy products on amazon. the e-tailer reports 2012 holidays sales were the biggest ever. consumers bought 306 items per second on its peak day. on cyber monday, shoppers ordered a total of 26.5 million items, setting a new record. kindle fire hd and kindle were among the top sellers.
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still ahead, what you haven't heard traders say about the fiscal cliff - until now. some perspective from the trading floor, after the break.
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time now for the final traders unplugged of 2012. ready to rumble from the floor of the cme group, alan knuckman and andrew keene. we are looking forward to your parting shots of the year. good to have you on the show. round 1) hero or zero - apple stock is down 25%-plus from its $700 top. what's the best way to bite that apple? > > apple is going lower next year, and i can give you a handful of reasons why it's going lower. you want these reasons? a) they are cannibalizing their own product. every person that buys an ipad mini takes away 25% from the tablet market. > > the question was where do you buy apple? if you don't want to buy it here, where do you buy it? > > $380, the opening of 2012. > > so you're waiting for it to go down to $380? > > yes. > > ok. a more conservative play than missing out on the whole game is to go into the qs. the qs are trading right now at $64, and apple makes up about 10% of the qs' valuation, so if you can lean on $62, which is the halfway level, you've got to understand- > > what's the catalyst though? > > technology shares are still- > > what's the catalyst? the tv
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is not coming out until the end of next term- > > there's something you coming! there's always something new coming! > > in a year! they're not going to have a new product for a whole year. > round 2) layoff the stocks - can layoff-king companies benefit from cost cutting. we have had a lot of them: bank of america with 30,000 planned layoffs, hpq with 29,000, even the u.s. government with 31,000 jobs lost. what's going on here? and which stocks do you buy? does it help? > > go ahead. > > andrew's philosophy is - and i am going to speak for him - that he thinks it's a cost- cutting measure and it's good for the stock- > > of course. any time you cut costs, you cut jobs, the stock goes up. look at bank of america. the second thing- > > j.c. penney- > > j.c. penney?! they're going to zero. > > exactly! so that is not going to help their game. > > they have a bad business model. that is why they're going out of the game. > > i believe it is going to help one stock: hewlett-packard. it's a stock that- > > hewlett-packard?! > > -long been forgotten about- > > put it in the basket with dell, j.c. penney- > > put it in the basket with rim and yahoo, which have had big, big jumps. it has value, it's a name, it just needs to reinvent itself- > > what's their product they sell? > round 3) the fiscal fiasco -
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is this fiscal cliff a real issue for the market jan 1st? > > no. the answer is no. the market doesn't care. this is the most widely talked-about- > > why is the vix over 20 then? > > -financial event in the history of the world- > > why is the vix 20? > > 20? it was 28 in may. we are nowhere near these relative highs- > > it is the highest it has been in months. > > it is down 70% on the year. nobody cares. the market will move on. the market right now is still up 13% on the year. so smoke on that. > > yes, it is up 13% this year- > > no more questions. > > -but we do have problems. downgrades of the u.s.- > > price action! > > not being able to pay? what happens when you can't pay your debt? > > look at the board. what does the board tell you? price action is positive. > > there's a lot of red up there actually. > > positive. > > i see a lot of red. > let's move on to the bonus round: name the fake options strategy terms: straddle- > > i will not get this. i've got $100 that says alan will get this. > > here we go: straddle, strangle, collar, or leash. > > leash is fake. it's not my first day, people- > > alan actually knew this.
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> > there are 21 basic options strategies- > > this isn't his first rodeo. leash is the correct answer. > a short leash is exactly where i like to keep you guys. thanks for being on the show. > > thank you.
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w we will be right back.
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matt shaprio, president of mws capital, joins us for chart talk. matt, this is a topic that hurts me all the way down to my toes: the hedge fund people, the pensions, have been loving this market. they are investing heavily. what is the
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average investor doing? they are yanking billions of dollars out. what gives? > > well, i think retail investors have been very frustrated with how the market has done since the financial crisis. i mean, who would have thought major banks and their bonds would have gone to zero 4 years ago? but, it has been 4 and 5 years, and it is time to kind of forget and kind of go on the offensive, because while the retail investors have been pulling money out of the stock market, funds have had really a great year this year. typical fidelity funds are actually beating the s&p 500. for instance, fidelity small cap funds up 18%, 19%- > wow. > > so i think unfortunately, investors have got to take a look at the long-term, and the institutional money is right, and stay the course. > just take a look at this: here is a chart of the s&p 500 this year. meantime, in november alone, small-time investors yanked $19 billion out of the market for the year. they have taken about $150 billion out, and those hedge fund guys and everybody else, they have
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pumped about $80 billion in. > > right. and i think that november, when they took money out, that really tells you something. remember, we had that little correction in october - the market fell at most 5, 6, 7 percent, but people just couldn't even handle a pullback like that, and they responded by pulling a lot of money out in the next month. of course, the market has come back, but look at yesterday: we were down heavy, then all of a sudden they are going to reconvene the house and we are back up. so, people have really just had enough. but the economic fundamentals are the best in five years. the financial crisis is over. and i think we're going to have a great year next year, if people can just stay the course and look at the performance of your own mutual funds. > that was my next question: is now the time to invest, or is it too late? because that tends to happen as well. usually it's the average investor who gets to the party too late. > > i think right now a lot of average investors i know, many of them are still in there 401k
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plans and the like. but, with housing recovering, with an employment picture, consumer sentiment, and industrial production, exports doing well, now is the time to get into stocks, get into real estate, get into investments in general, because i think we are going to do well, not only in next year, but in the years to come. > matt, good to have you on the show and sharing your knowledge with us today. have a good day. > > thanks a lot. that closes out our show for today. coming up next week: touchy feel tech. how ibm is creating computers that work by touch, feel and even smell. before we take off, a huge thank you to the first business crew for making this a tremendous year. and from all of us here, thank you for watching.
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oakland police investigating three homicides that happened early this morning. we'll get you the latest information. california highway patrol say they have the driver involved in a deadly hit and run. we'll tell you why they are so sure they've got their man. muni turning 100 years old. the gift it's giving its riders in honor of the centennial celebrations. it's all ahead.